Washington, DC

Tax-Exempt Organization Employee Benefits

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The rules governing the employee benefits and executive compensation programs of tax-exempt organizations are very different from those governing for-profit companies. Tax-sheltered annuity retirement plans must comply with the specialized provisions of, and regulations under, Section 403(b) of the Internal Revenue Code. Executive compensation is not only subject to scrutiny by the public, but is also regulated by both the Internal Revenue Code’s “excess benefit” rule and state public charity rules. Severance and early or supplemental retirement plans must be designed to satisfy the deferred compensation tax rules of Sections 457(b) and/or 457(f), which are applicable only to tax-exempt organizations.

Nixon Peabody’s Employee Benefits team has worked collaboratively with a wide variety of tax-exempt organizations, including hospitals, colleges and universities, cultural institutions, foundations, and other charitable and civic organizations. We work with these clients and their outside consultants to design retirement and compensation programs that address the specific needs of the employer while addressing the unique issues that arise with tax-exempt organizations.